Time Warner Bid: Deregulate NYC

Noting 160-channel competition from Verizon Communications, Time Warner Cable is seeking to obtain total price deregulation in Manhattan from the Federal Communications Commission.

In 1992, Congress slapped price controls on cable operators until they could prove they faced “effective competition,” as that term is defined in federal law, within a specific community. Some, but not all, rate controls were lifted in March 1999.

With Verizon invading Manhattan and other densely populated New York City boroughs with its all-fiber FiOS TV service, Time Warner Cable said in a Sept. 17 filing at the FCC that the competitive test had been met and the last vestiges of price controls had to be removed.

The FCC notified the public last Friday of Time Warner Cable’s request.

According to Pali Research, Time Warner Cable has 600,000 video subscribers in Manhattan, serving 81% of households.

When phone companies seek deregulation, their petitions are deemed granted if not rejected by the FCC within 15 months. No such deadline hangs over the FCC when reviewing similar cable petitions; some cable operators have waited up to four years for the FCC to act.

If the FCC approved Time Warner Cable’s petition, local regulators in Manhattan could not put a price ceiling on the rates charged for basic cable.

Basic cable is the introductory package that all subscribers must purchase by law before buying any other programming service from a cable operator. The basic tier must include local TV stations. Local governments often demand inclusion of public, governmental and educational channels.

If totally deregulated, Time Warner Cable would no longer be required by the FCC to offer a uniform rate structure, which would allow the company to experiment with pricing and packaging options.

Time Warner Cable would also be liberated from the FCC’s so-called tier–buy-through rule, which bars a cable operator from requiring the purchase of multiple programming packages before a customer may buy a premium service like HBO or pay-per-view event like boxing.